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Shares fell in Asia on Friday as tensions flared between the U.S. and China and as more job losses compounded the economic fallout from the coronavirus pandemic.

Hong Kong’s benchmark Hang Seng Index
HSI,
+1.65%
led regional losses, dropping 5.2% after the central government in Beijing said China’s ceremonial parliament will consider a bill that could limit opposition activity in the former British colony.

Mass protests in the southern Chinese financial hub grew increasingly violent last year and only abated somewhat as the city fought off the coronavirus pandemic. Authorities have since cracked down on dissent, arresting some of Hong Kong’s veteran pro-democracy figures alleging they were behind the demonstrations that largely were driven by young students.

“Traders around the world are playing the waiting game to see details of the new Hong Kong law to gauge how severe the terms are,” Stephen Innes of AxiCorp said in a commentary.

More specifically, he said, will be the U.S. response to the possible impact on Hong Kong’s special economic status. Under the terms of Britain’s handover of control of the territory to Beijing, the city kept its own trade regime and finances and a legal system based on western-style civil liberties that are denied to people living in other parts of China.

Shanghai’s Composite index
SHCOMP,
+0.39%
fell 1.5% despite a promise by Chinese Premier Li Keqiang, the top economic official, to spend more to help revive the country’s economy and curb surging job losses from the pandemic.

Li told the opening session of the national legislature that Beijing would set no economic growth target in order to focus on fighting the disease. He warned in his annual report to lawmakers that the battle against the pandemic isn’t over and urged the country to “redouble our efforts” to revive slumping economic growth.

On Wall Street, the S&P 500
SPX,
+2.62%
gave up 0.8% to 2,948.51 on Thursday after the White House issued a report attacking Beijing’s economic policies and human rights violations.

The Dow Jones Industrial Average
DJIA,
+3.15%
fell 0.4% to 24,474.12 and the Nasdaq composite
COMP,
+2.06%
lost 1%, to 9,284.88. Small-company stocks, which have notched the biggest gains this week, bucked the downward trend.

The selling was tentative at first, but gained momentum as the day progressed. Initially, traders reacted to the White House attacking China, which expands on get-tough rhetoric President Donald Trump hopes will resonate with voters angry about Beijing’s handling of the disease outbreak.

Meanwhile, the State Department announced that it had approved the sale of advanced torpedoes to the Taiwanese military, a move sure to draw a rebuke from Beijing, which regards the island as a renegade province.

Despite a week of uneven finishes, Wall Street is on track to recoup its losses from last week after a strong rally on Monday that reversed all of the market’s losses for the month. The index is still down about 13% from its high in February.

Oil prices fell back on Friday, with benchmark U.S. crude
CLN20,
-1.46%
losing close to $2 to $31.95 per barrel in electronic trading on the New York Mercantile Exchange. It closed higher on Thursday, the sixth day in a row, gaining 43 cents, or 1.3%, to $33.92 a barrel.

July Brent crude oil
UK:BRNN20
, the international standard, declined $1.48 to $34.57 per barrel. It gained 31 cents, or 0.9%, to close at $36.06 a barrel in London.

Crude oil started the year at about $60 a barrel, but plummeted earlier this year as demand sank due to widespread travel and business shutdowns related to the coronavirus. The price has risen this month as oil producing nations cut back on output and the gradual reopening of economies around the globe have driven up demand.

Bonds yields were mixed. The yield on the 10-year Treasury note, a benchmark for interest rates on many consumer loans, fell to 0.65% from 0.66% late Thursday.

The U.S. dollar
USDJPY,
+0.02%
fetched 107.43 Japanese yen, down from 107.63 yen on Thursday.

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